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Flower exporters eye rosier times with new markets

THE STANDARD
March 29th 2022

Workers sorting flowers at a farm in Naivasha. [Antony Gitonga, Standard]

Kenya’s flower industry is eyeing an expanded export market as it seeks to grow revenues and shake off the Covid-19 pandemic shocks.

The Kenyan Flower Council (KFC) said it had identified several new markets for local flowers and other fresh produce.

The industry lobby said while the need to diversify has always been there, the pandemic made it more urgent.

With Kenya’s produce largely dependent on the European market, it meant that business was largely dictated by the closure and reopening of economies in the region.

About 70 per cent of Kenyan flowers are sold in Europe, with most of them going through the flower auction in the Netherlands.

“It is important to see whether in another few years we can increase volumes to these new markets and quit relying on the traditional markets… single markets are too risky,” KFC Chief Executive Clement Tulezi told Financial Standard in an interview.

“We have identified about eight new and emerging markets that have potential, and we believe that with a bit of promotion and discussing the quality of our produce with them, we can push the volumes up.”

These include the Gulf States, which, Mr Tulezi noted, are major consumers of flowers, including Kenya’s.

The countries import flowers valued at more than $18 million (over Sh2 billion) annually. Most of the flowers come from the Netherlands, with direct imports from Kenya being just one per cent.

While some of the flowers coming from the Dutch auctions are Kenyan, Mr Tulezi says, the local industry is looking to increase direct exports to the Middle East.

Other markets where KFC is hoping to grow exports are Australia, United States, Japan, Russia, South Korea, China and Turkey. “We are also looking at intra-African trade, hinging on the African Continental Free Trade Area (AfCFTA),” he said.

“We have done studies in countries like Nigeria, DRC, Ghana, Botswana, and the potential is huge. We have had visitors from Namibia who want to import flowers directly from Kenya,” added Mr Tulezi.

AfCFTA was expected to increase the level of trade among Africans, although there are a number of challenges that the continent has to overcome to make what could be the world’s largest free trade area a success.

It promises to create the single largest trade bloc in the world, with 1.3 billion people and a $2.5 trillion (Sh282 trillion) market.

The major challenge Kenya faces in growing fresh produce exports to other African countries is poor connectivity. “The biggest challenge that we have is logistics,” said Mr Tulezi.

“We have also not harmonised intra-Africa border controls. On paper, it is very easy to export and import to and from other African countries, but it is an entirely different story if you showed up with produce at most of the borders or airports,” he said.

According to the United Nations Conference on Trade and Development (Unctad), intra-Africa trade stands at about 16.6 per cent. This is compared to 68.1 per cent in Europe, 59.4 per cent in Asia and 55 per cent in America. “Asia and Europe are still the main trade partners of the continent,” Unctad has said.

This, according to Unctad, is due to high dependence on trade in primary goods, high product and market concentration of exports, and weak regional production networks.

“If we can surmount these challenges, then we can trade with each other easily. If you look at other regions, they tend to trade more within. It is only in Africa that we trade more with other regions than we do within the continent,” said Mr Tulezi.

“We have to change that. We have enough products and population to sustain trade. We also have to do this to reduce dependence on other regions, which also put too many conditions, many of which are not favourable to us,” he added.

The horticulture industry remains a key foreign exchange earner for Kenya, being the third-largest after tea and tourism. The tourism sector is, however, yet to fully recover from the impact of Covid-19, and its earnings are yet to match the pre-pandemic levels.

Last year horticulture earned Kenya Sh157.7 billion, up from Sh150 billion in 2020, according to data by the Kenya National Bureau of Statistics.

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